Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Q3 2023 Earnings Presentation
56 slides from Intercorp Financial Services's earnings presentation, Nov 9, 2023
Slide 1: Earnings Presentation 3Q23 Results
Earnings Presentation 3Q23 Results
Slide 2: Macro outlook, Profitable growth, Digital performance, Key businesses
1 Macro outlook 2 Profitable growth 3 Digital performance 4 Key businesses
Slide 3: Decrease in GDP and inflation trigger first cut in soles rates
Decrease in GDP and inflation trigger first 1 cut in soles rates (1) Quarterly GDP growth YoY (%) Interest rates (%) 3.9% 3.4% Soles reference rate (BCRP) Dollar reference rate (FED) Oct23 7.50 7.75 7.50 7.25 2.0% 1.7% 5.50 Nov23 2.50 5.25 5.50 5.50 4.50 0.25 -0.4% -0.5% 1.75 -1.0% 0.25 0.25 1Q22 2Q
Slide 4: Macro growth sentiment has declined throughout the year
Macro growth sentiment has declined 1 throughout the year FY23 GDP growth expectation (%) FY23 Internal demand estimate 2.5% 2.1% 2.5% 1.5% 2.0% 1.8% 0.6% -0.3% Dec22 Mar23 Jun23 Sep23 Dec22 Mar23 Jun23 Sep23 FY23 Private investment estimate FY23 Public investment estimate 1.0% 1.5% 1.5% 1.0% -0.5%
Slide 5: El Niño might impact 1Q24
1 “El Niño” might impact 1Q24 Probability of a coastal “El Niño” None/Weak Moderate Strong Actions taken to mitigate impact 62% Review our infrastructure for the safety of our 58% employees and clients 55% 49% Further tightening of retail credit standards in 47% the North and South 33% 25% Review of
Slide 6: We have further moderated banking activity by tightening credit standards
We have further moderated banking 1 activity by tightening credit standards 7.0 7.0 559 5.9 0% QoQ 428 427 0% QoQ +18% YoY -24% YoY 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Credit & debit cards purchases (S/ bn) Mortgage disbursements (S/ mn) 867 254 271 750 722 229 -17% QoQ -16% QoQ -4% YoY -10% YoY 3Q22 2Q23
Slide 7: IFS' 3Q23 earnings impacted by CoR and investment results
IFS’ 3Q23 earnings of S/ 195 mm impacted 1 by CoR and investment results IFS net profit (S/ mn) Re-expressed figures for IFS & insurance in 3Q22 for comparison purposes (1) ROE 16.0% 14.3% 8.2% ROE 21.4% 14.8% 10.2% 64.7% 143.2% 52.4% 366 Banking(2) Insurance 274 88 196 100 | 54 (1) 35 391 | 344 331
Slide 8: 9M23 operating trends
1 9M23 operating trends Capital Profitability Loan growth 2023 9M23 2023 9M23 High single digit growth in IBK TCR ∼ 15% 15.0% IFS ROE ∼ 14.0% 11.8%(1) total loans(2) led by low double digit growth in consumer loans IBK CET1 ∼ 11% 11.2% Revised: 8% - 10% Impacted by CoR and investment Total loans +10
Slide 9: Macro outlook, Profitable growth, Digital performance, Key businesses
1 Macro outlook 2 Profitable growth 3 Digital performance 4 Key businesses
Slide 10: Customer base growth continues across businesses
Customer base growth continues 2 across businesses 5.9 2.6 5.2 +13% YoY 2.3 +11% YoY Sep22 Sep23 Sep22 Sep23 Banking – customers (mn) Insurance – customers (mn) 71 1.3 65 +9% YoY 0.9 +38% YoY Sep22 Sep23 Sep22 Sep23 Wealth management – customers (th) Payments – merchants (mn) 10
Slide 11: 4% QoQ growth in revenues at IFS, banking NIM stable at 5.6%
4% QoQ growth in revenues at IFS, 2 banking NIM stable at 5.6% in the quarter IFS quarterly revenues (S/ mn) Re-expressed figures for IFS & insurance in 3Q22 for comparison purposes NIM 5.2% 5.5% 5.5% NIM 5.0% 5.6% 5.6% 1,175 1,287 1,282 413 | 525 522 Insurance 465 Banking (1) 1,824 1,894 1,661 | 1,
Slide 12: Deceleration in banking fees due to decreased level of activity
Deceleration in banking fees due to 2 decreased level of activity IFS quarterly net fee income (S/ mn) 213 208 199 Banking % 16% 62% revenues 15% 16% 15% (% revenues) (Fee contribution) 3Q22 2Q23 3Q23 -5% QoQ | -7% YoY 316 299 85 88 87 Payments 290 91% 27% (% revenues) (Fee contribution) 3Q22 2Q23 3
Slide 13: Asset quality deterioration in retail banking due to adverse macro variables
Asset quality deterioration in retail banking 2 due to adverse macro variables Credit cards & personal loans Payroll deduction loans Mortgages Commercial Reactiva NPL coverage ratio Cost of risk 6% 2% Banking Retail Commercial 43% 42% 8.1% 221% 258% 6.0% 161% 232% 3.1% 5.0% 21% 3.6% 173% 21% 182% 1.
Slide 14: Increasing payment solutions to help retail customers
Increasing payment solutions to help 2 retail customers Non-rescheduled Rescheduled (2) Payment of non-rescheduled loans (S/ mn) 10,057 11,100 11,129 Collected Not paid 9% 14% 18% 97.9% 2.1% (2) Payment of rescheduled loans 91% 86% Collected Not paid 82% 85.5% 14.5% Jan23 Jun23 Sep23 Consumer loans(
Slide 15: Tight management of costs further improves efficiency ratio
Tight management of costs further 2 improves efficiency ratio IFS expenses (S/ mn) Banking expenses (S/ mn) Re-expressed figures for IFS & insurance in 3Q22 for comparison purposes C/I 35.1% (1) 35.1% 33.8% C/I 40.1% 37.3% 36.5% 488 497 491 690 688 688 | 673 3Q22 2Q23 3Q23 -1% QoQ | +1% YoY Banking
Slide 16: Macro outlook, Profitable growth, Digital performance, Key businesses
1 Macro outlook 2 Profitable growth 3 Digital performance 4 Key businesses
Slide 17: Building a scalable digital proposition
Building a scalable digital proposition Izipay IzipayYa Digital bank Investments Insurance Cuenta Sueldo Marketplace Loyalty & promotions Digital My financing Piggy Payments finances 2.5 mn 6.0 mn 0.9 mn bank IBK app users Plin users IBK piggy bank users 100% digital >100 th 1.5 mn account Shopstar
Slide 18: Consolidating digital achievements in banking
Consolidating digital achievements in 3 banking 75% 86% 75% 70% Sep22 Sep23 Sep22 Sep23 Digital customers Digital self-service (% of digital self-service) (% of digital customers – Retail banking) 63% 46 60% 39 Sep22 Sep23 Sep22 Sep23 NPS – digital customers Digital sales (Points – Retail Banking) (
Slide 19: Working towards digital innovation in insurance & wealth management
Working towards digital innovation in 3 insurance & wealth management Insurance 57% 39% Wealth management 43% 39% 3Q22 3Q23 Digital self-service (% of digital self-service) 9% 10% Sep22 Sep23 Digital transactions Interfondos (% of digital transactions) 3Q22 3Q23 Digital premiums (% of total premiums
Slide 20: Macro outlook, Profitable growth, Digital performance, Key businesses
1 Macro outlook 2 Profitable growth 3 Digital performance 4 Key businesses
Slide 21: Increasing market shares in banking with moderation in consumer loans
Increasing market shares in banking 4 with moderation in consumer loans Banking 22.7 22.7 18.6 19.4 19.4 13.3 14.0 21.5 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Sep22 Sep23 Consumer banking loans (%) Retail banking loans (%) Payroll inflow (%) 14.8 15.1 15.2 9.4 9.6 14.7 9.1 10.0 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23
Slide 22: Net interest income driving growth in revenues
Net interest income driving growth in 4 revenues Banking % YoY +14% -7% 0% +9% +122 -14 +0 1,268 1,175 3Q22 Net interest income Fee income Other income 3Q23 Banking – Revenue bridge from 3Q22 to 3Q23 (S/ mn) 22
Slide 23: NIM remains flat at 5.6% despite increasing yields
NIM remains flat at 5.6% despite increasing 4 yields... Banking NIM Risk-adjusted NIM Retail loans Commercial loans Yield on loans Return on interest-earning assets Financial investments Cash and banks 66,346 66,570 11.5% 11.6% 10.9% 10.5% 17% 15% 9.8% 9.1% 9.3% 8.7% 17% 8.3% 18% 7.5% 30% 5.4% 5.5%
Slide 24: ... due to rising funding costs
… due to rising funding costs 4 Banking LDR(1) 98% 103% System’s 104% 104% LDR(1) Ref. rate YoY (2) +50 bps (S/) 60,210 58,572 +225 bps (US$) Cost of funds Cost of deposits 11% 8% 13% 13% 36% 39% 4.0% 4.2% 3.6% 3.2% 79% 2.8% 3.6% 3.8% 3.3% 39% 40% 2.8% 2.4% 3Q22 3Q23 Retail deposits Commercial depos
Slide 25: Increased contribution of individual life & retail insurance to total premiums
Increased contribution of individual life & retail insurance to total premiums 4 Insurance Annuities market 28.8% 33.0% 28.0% 30.5% (1) share 314 314 %chg %chg 38 266 35 QoQ YoY 37 -5% -8% 212 90 133 44 78 +15% -33% 70 71 59 67 34 60% +4% +18% 46% 119 61 84 84 +42% +42% (2) 2019 3Q22 2Q23 3Q23 Quart
Slide 26: Insurance investment portfolio delivers sound returns
Insurance investment portfolio delivers sound returns 4 Insurance Insurance - ROIP (%) Insurance - Portfolio breakdown 7.9% 6.0% 11% 10% 5% 7% 82% 85% 3Q22 3Q23 3Q22 3Q23 Fixed Income Equity and Mutual Funds Real Estate 26
Slide 27: 8% YoY growth in AUM
8% YoY growth in AUM 4 WM AUM (US$ mn) Deposits (US$ mn) Loans (US$ mn) 5,930 5,990 1,010 484 5,524 926 958 436 422 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 +1% QoQ | +8% YoY +3% QoQ | -5% YoY -3% QoQ | -13% YoY 27
Slide 28: Growth in merchants and volumes has moderated in 3Q
Growth in merchants and volumes has moderated in 3Q 4 Payments +38% YoY +8% YoY +42% YoY +2x YoY Transactions Transactions (mn) 131.1 168.5 (mn) 8.6 18.7 1.3 14.4 667 1.4 13.3 0.9 470 0.8 Sep22 Sep23 3Q22 3Q23 Sep22 Sep23 3Q22 3Q23 Merchants (mn) Volume (S/ bn) Merchants (th) Volume (S/ bn) E-commer
Slide 29: Izipay is working on creating synergies with Interbank
Izipay is working on creating synergies with Interbank Payments 4 94 97 96 -1% QoQ Additional cash flow Increased float in merchants’ coming to IBK accounts +3% YoY IBK accounts +22% YoY +31% YoY 3Q22 2Q23 3Q23 Revenues (S/ mn) 30.2 -12% QoQ Greater transactional volumes New model tested 25.9 26.5 +
Slide 30: Plin continues to accelerate within interoperable P2P system
Plin continues to accelerate within interoperable P2P system 4 Payments +51% YoY +2x YoY >2x 13.0 9.5 20.7 8.6 4.2 8.8 Sep22 Sep23 3Q22 3Q23 Pre-interop. Post-interop. Users (mn) Volume (S/ bn) IBK Transactions (mn)(1) IBK Share (%) 46% 39% 30 1) Monthly data | Pre-interoperability: Apr23, post-inte
Slide 31: Takeaways
Takeaways
Slide 32: Takeaways
Takeaways Peru’s economy Increasing market Good performance in 1 decelerating, moderation of banking activity and increased consumer risk 2 shares in banking with moderation in consumer loans 3 Insurance business, investment results at WM not yet recovered Tight management of 4 5 6 Digital indicator
Slide 33: Appendix
Appendix
Slide 34: IFS key indicators 3Q23
IFS key indicators 3Q23 16.0% 25.9%(1) 14.3% 5.0% 5.6% 5.6% 8.2% ROE NIM 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 2.6%(1) 5.0% 1.6% 1.5% 3.6% 1.9% Banking 0.9% ROA CoR 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 IFS 5.2% 5.5% 5.5% 40.1% 37.3% 36.5% NIM C/I ratio 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 management 31.2%(1) 35.1% 5.5 5.
Slide 35: IFS key indicators 9M23
IFS key indicators 9M23 19.6%(1) 11.8%(2) 5.5% 5.6%(2) 16.3% 4.8% 11.3% ROE NIM 9M22 9M23 9M22 9M23 1.9%(1) 1.3%(2) 1.6% 1.2% 4.0% Banking 1.7% ROA CoR 9M22 9M23 9M22 9M23 IFS 4.9% 5.3% 5.5%(2) 41.3% 37.6% 36.9%(2) NIM C/I ratio 9M22 9M23 9M22 9M23 management 43.2% 41.0%(1) 34.2%(2) 5.5 6.0 34.6% We
Slide 36: IFS' 9M23 earnings
IFS’ 9M23 earnings of S/ 793 mm IFS net profit (S/ mn) Re-expressed figures for IFS & insurance in 9M22 for comparison purposes (1) (2) ROE 16.3% 11.3% ROE 19.8% 12.8%(4) 105.6% 71.1% 1,009 216 | 218 Banking(3) 155 Insurance 721(4) (1) 1,046 | 1,047 793(2) 9M22 9M23 9M22 9M23 -29% YoY -29% YoY ROE n
Slide 37: IFS' 9M23 revenues grew 7% YoY
IFS’ 9M23 revenues grew 7% YoY IFS revenues (S/ mn) Re-expressed figures for IFS & insurance in 9M22 for comparison purposes (2) NIM 4.9% 5.3% NIM 4.8% 5.5%(4) 3,312 3,762(4) 1,140 | 1,506 1,481 Banking(3) Insurance (1) 5,511(2) 4,570 | 5,159 9M22 9M23 9M22 9M23 +14% YoY -2% YoY management 287 Payme
Slide 38: ESG updates
ESGon Focus updates building a sustainable business Environmental Social Governance & Economic Sustainability Report 2022 aligned with GRI Standard 50.3K users Interbank’s 346.2K sessions Updated Diversity and Sustainable 6 webinars Sustainability Policies Financing 5 courses Framework CSO member
Slide 39: Sound capitalization levels
Sound capitalization levels Banking 128.6% 136.1% 127.1% System 14.6% 16.2% 16.4%(1) TCR Insurance 100.0% Reg. min. 3Q22 2Q23 3Q23 15.2% 15.2% 15.0% 11.6% 11.4% 11.2% Solvency ratio Banking 10.8% Reg. 6.4% management min. Reg. min. 19.1% 16.7% 16.0% Wealth 12.0% Reg. min. 3Q22 2Q23 3Q23 3Q22 2Q23 3Q
Slide 40: Contained banking NPLs despite growth in provisions
Contained banking NPLs despite growth in provisions (S2+S3) ratio & S3 NPL ratio (%) Impairment loss on loans, net (S/ mn) & Cost of risk (%) 13.3% 16.0% 1,291 12.8% 12.7% 14.0% 581 12.0% 13.4% 463 10.0% 417 368 8.0% 313 328 278 6.0% 189 199(1) 193 210 2.5% 2.7% 3.1% 178 152 4.0% 110 4.5% 5.0% 2.0%
Slide 41: Focusing on low-risk loans & retail deposits
Focusing on low-risk loans - & retail deposits Breakdown of loans (S/ mn) Funding structure (S/ mn) %chg %chg %chg %chg 3Q22 2Q23 3Q23 QoQ YoY 3Q22 2Q23 3Q23 QoQ YoY Consumer loans Credit cards & other loans 8,998.9 10,778.9 10,599.6 -1.7% 17.8% Deposits 45,493.7 45,623.2 45,652.6 0.1% 0.3% (1) Payr
Slide 42: Reactiva loan balances down 68% YoY
Reactiva loan balances down 68% YoY, representing 2% of Interbank’s portfolio Reactiva Peru loan balances by segment (S/ bn) 2.9 3Q23 Segment YoY Corporate -84% Corporate: n.m. Mid-sized -70% Mid-sized: S/ 0.6 bn 1.2 SME: S/ 0.3 bn 0.9 SME -62% Total -68% 3Q22 2Q23 3Q23 42 SME Mid-sized Corporate
Slide 43: Manageable dollarization levels at Interbank
Manageable dollarization levels at Interbank Total loans Retail loans Commercial loans % PEN 68% 71% 89% 93% 57% 58% System 7% 5% 28% 27% 51% 57% 93% 95% 72% 73% 49% 43% 3Q18 3Q23 3Q18 3Q23 3Q18 3Q23 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro
Slide 44: IFS' 3Q23 statement of financial position
IFS’ 3Q23 statement of financial position (1) Intercorp Financial Services' Statement of financial position S/ million %chg %chg 09.30.22 06.30.23 09.30.23 09.30.23 09.30.23 06.30.23 09.30.22 Assets Cash and due from banks and inter-bank 12,941.6 11,159.1 11,106.4 -0.5% -14.2% funds Financial invest
Slide 45: IFS' 3Q23 P&L
IFS’ 3Q23 P&L (1) Intercorp Financial Services' P&L statement S/ million %chg %chg 3Q22 2Q23 3Q23 QoQ YoY Interest and similar income 1,547.1 1,808.3 1,849.0 2.2% 19.5% Interest and similar expenses -462.9 -645.1 -681.2 5.6% 47.2% Net interest and similar income 1,084.3 1,163.3 1,167.8 0.4% 7.7% Imp
Slide 46: Banking segment's 3Q23 statement of financial position
Banking segment’s 3Q23 statement of financial position Banking Segment' Statement of financial position S/ million %chg %chg 09.30.22 06.30.23 09.30.23 09.30.23 09.30.23 06.30.23 09.30.22 Assets Cash and due from banks and inter-bank 11,144.2 9,837.3 9,579.5 -2.6% -14.0% funds Financial investments
Slide 47: Banking segment's 3Q23 P&L
Banking segment’s 3Q23 P&L Banking Segment's P&L statement S/ million %chg %chg 3Q22 2Q23 3Q23 QoQ YoY Interest and similar income 1,260.6 1,544.5 1,590.9 3.0% 26.2% Interest and similar expenses -418.6 -592.0 -627.3 6.0% 49.9% Net interest and similar income 842.0 952.5 963.5 1.2% 14.4% Impairment
Slide 48: Insurance segment's 3Q23 statement of financial position
Insurance segment’s 3Q23 statement of financial position (1) Insurance Segment' Statement of financial position S/ million %chg %chg 09.30.22 06.30.23 09.30.23 09.30.23 09.30.23 06.30.23 09.30.22 Assets Cash and due from banks and inter-bank 663.7 418.3 378.7 -9.5% -42.9% funds Financial investments
Slide 49: Insurance segment's 3Q23 P&L
Insurance segment’s 3Q23 P&L Insurance Segment's P&L statement (1) S/ million %chg %chg 3Q22 2Q23 3Q23 QoQ YoY Interest and similar income 243.2 214.1 212.5 -0.7% -12.6% Interest and similar expenses -31.1 -30.3 -28.7 -5.2% -7.6% Net interest and similar income 212.1 183.7 183.8 0.0% -13.4% Recovery
Slide 50: Wealth management segment's 3Q23 statement of financial position
Wealth management segment’s 3Q23 statement of financial position Wealth Management Segment' Statement of financial position S/ million %chg %chg 09.30.22 06.30.23 09.30.23 09.30.23 09.30.23 06.30.23 09.30.22 Assets Cash and due from banks and inter-bank 1,107.6 764.5 1,061.6 38.9% -4.2% funds Financ
Slide 51: Wealth management segment's 3Q23 P&L
Wealth management segment’s 3Q23 P&L Wealth Management Segment's P&L Statement S/ million %chg %chg 3Q22 2Q23 3Q23 QoQ YoY Interest and similar income 43.3 47.6 43.6 -8.4% 0.6% Interest and similar expenses -12.4 -21.9 -24.8 13.1% n.m. Net interest and similar income 30.9 25.6 18.7 -26.8% -39.4% Imp
Slide 52: Payments segment's 3Q23 statement of financial position
Payments segment’s 3Q23 statement of financial position Payments Segment' Statement of financial position S/ million %chg %chg 09.30.22 06.30.23 09.30.23 09.30.23 09.30.23 06.30.23 09.30.22 Assets Cash and due from banks and inter-bank 104.7 191.7 104.0 -45.8% -0.7% funds Financial investments - 54.
Slide 53: Payments segment's 3Q23 P&L
Payments segment’s 3Q23 P&L Payments P&L Statement S/ million %chg %chg 3Q22 2Q23 3Q23 QoQ YoY Interest and similar income 0.5 2.1 2.5 21.2% n.m. Interest and similar expenses -0.4 -1.3 -1.3 -1.7% n.m. Net interest and similar income 0.1 0.7 1.2 61.3% n.m. Fee income from financial services, net 84.
Slide 54: Definitions
Definitions Concept Definition Net interest and similar income + Net fee income from financial services + Other income Total revenues + Income from insurance results (Salaries and employee benefits + Administrative expenses + Depreciation and amortization) / (Net Efficiency ratio interest and simila
Slide 55: Safe Harbor for Forward-Looking Statements
Safe Harbor for Forward-Looking Statements This corporate presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this corporate presentation regarding IFS’ busin
Slide 56: Intercorp Financial Services
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Intercorp Financial Services Inc. Common Shares — Q3 2023 Earnings Presentation on 6ix